Suppose a large corporation produces airplanes in a perfectly competitive indust

Question

Suppose a large corporation produces airplanes in a perfectly competitive industry. The data in the following table give information about the cost of producing a particular type of airplane (in thousands), where quantity is q, total cost is C, and marginal cost is MC. Airplanes sell for $224 thousand MC 400 600 712 792 848 920 1000 1088 1233 1423 1658 1938 200 112 80 56 72 80 4 145 190 235 280 10 Suppose this firm has the capacity to produce up to 11 airplanes of this particular type. If the company manager's goal is to maximize revenue, how many airplanes wil the firm produce?airplanes. (Enter your response using an integer) What will be the firm's profit? S thousand. (Enter your response rounded to two decimal places) Suppose instead that the manager's goal is to maximize profit. If so, then how many airplanes will the firm produce? airplanes. (Enter your response using an integer.) What will be the firm's profit? thousand. (Enter your response rounded to two decimal places)

Explanation / Answer

(a) Total revenue (TR) = Price (P) x q, Computed as follows.

Revenue is maximized when Number of planes = 11

(b) Profit ($) = TR - C = (2464 - 1938) = 526.00 thousands

(c)

From above table, Profit is maximized when Number of planes = 9

(d) Profit ($'000) = 593.00 thousands

q P ($'000) TR ($'000) 0 224 0 1 224 224 2 224 448 3 224 672 4 224 896 5 224 1120 6 224 1344 7 224 1568 8 224 1792 9 224 2016 10 224 2240 11 224 2464

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.